HIPAA and Your Compliance Program

1. September 25, 2000 HIPAA and Your Compliance Program HCCA’s 2000 Compliance Institute New Orleans, Louisiana

2. Presentation Agenda • Introductions • Overview and Background • HIPAA Requirements and Provisions • Technology with Q&A • Privacy with Q&A • Security with Q&A • Integration into Compliance Program

3. Overview and Background of HIPAA

4. Group and Individual Insurance Reform Limits on pre-existing exclusion provisions Portability of coverage, guaranteed issue and renewal Fraud and Abuse Medicare integrity, data collection, beneficiary incentive programs Increased penalties, sanctions, and exclusions Tax-Related Health Provisions MSAs, long-term care insurance, taxation of insurance benefits Administrative Simplification (AS) Improve efficiency and effectiveness of the healthcare system Define standards for electronic transmission - standard identifiers, transaction and code sets Protect the privacy and security of health information General Provisions

5. Applicability

6. Non-Compliance with Requirements $100 per violation to a maximum of $25,000 per requirement per year Considering the proposed security rules contain more than 25 specific requirements, the maximum penalty can exceed $625,000 per year Wrongful Disclosure of Health Information Simple disclosure – fines up to $50,000 and/or one year in prison Disclosure under false pretenses – fines up to $100,000 and/or five years in prison Disclosure with intent to sell or use – fines up to $250,000 and/or 10 years in prison Penalties and Fines

7. Technology Requirements

8. Transactions, Code Sets and Identifiers • Transaction Standards for HIPAA: “Transactions” are the exchange of information between two parties carrying out financial and administrative activities with data elements in a single format. • Three Categories of Technology Requirements: a) Transaction Sets b) Code Sets c) Identifiers

9. Highlights Standardized transaction formats and data elements for information that is transmitted and received electronically Code Sets Standards Built on Current Coding Systems Major code sets characterize medical data (e.g. CPT, ICD-9) Code sets included in standard transaction sets Current national coding standards to be updated in 2002 Unique Identifiers “Intelligence-free” (will not contain any encoded information) “Single unique identification of providers” Apply to all persons furnishing healthcare services and supplies Reduce potential for fraud and abuse Creates considerable privacy/ confidentiality concerns Transactions, Code Sets and Identifiers

10. Transactions, Code Sets and Identifiers • Standard transaction sets are defined for the following: • Health claims or equivalent encounter (X12N 837) • Enrollment and disenrollment in a health plan (X12 834) • Eligibility for health plan - inquiry/response (X12N 270-271) • Healthcare payment and remittance advice (X12N 835) • Health plan premium payments (X12 820) • Health claim status - inquiry/response (X12N 276-277) • Coordination of benefits (X12N 837) • Referral certification (X12N 278) • Referral authorization (X12N 278) • First report of injury (open) • Health claims attachments (open) Standard Transaction Record • Code Sets • ICD-9-CM (diagnosis and procedures) • CPT-4 (physician procedures) • HCPCS (ancillary services/procedures) • CDT-2 (dental terminology) • NDC (national drug codes) Identifiers Providers Employers Health plans (open) Individuals (open)

11. Key Business Considerations • Integration of new transactions into legacy systems • Investment in new systems/channels • Revision of Q/A testing and user acceptance processes • Integration of technology requirements in contracts, accreditation • Budget impact • Return on investment • Leverage investment in Y2K

12. Privacy Requirements

13. Privacy Standards • IIHI • Uses and Disclosures • Minimum Necessary • Rights of Individual • Privacy Official • Training • Complaint Handling • Disclosure Accounting • Business Partners • Related Entities • Internal process changes

14. Authorization required for: Disclosures on request of individual, entity or third party Marketing, fund-raising purposes Disclosure to non-health related affiliates (e.g., life insurance) Underwriting or risk rating Employment determinations Sale, rental or barter Disclosure of psychotherapy notes or research information Authorization not required for: Uses or disclosures relating to treatment, payment or health care operations Public health agency activities Health oversight and regulatory agencies Judicial proceedings and law enforcement investigations Health care fraud Research purposes (under rigorous criteria) Disclosure of “de-identified” health information Protected Health Information Permitted Uses and Disclosures

15. Minimum Necessary Disclosure • Reasonable efforts not to use or disclose more than the minimumamount of information needed to accomplish an intended purpose • Entity designates staff to determine minimum necessary information • Determination made on individual basis within limits of technology • Pervasive throughout organization • Applies to both internal and external uses • “Minimum necessary” varies by function and department • Implications for information systems

16. Administrative Requirements • Designate privacy official • Conduct privacy training program • Verification procedures • Maintain policies and procedures for PHI • Notice of privacy practices

17. Business Partners • Contractors providing services to covered entities - that utilize or share IIHI • Business partner contracts must contain specific privacy provisions • Appropriate safeguards of records • Report any unauthorized disclosures to entity • Books and records available for inspection • Material breach by partner grounds for termination, constitutes violation by entity • Member/patient is third party beneficiary • Extension of liability

18. Rights of Individuals • With the exception of treatment, payment or health care operations, most uses and disclosures are permitted only with authorization • Individuals may revoke their authorization(s) • May request restriction of uses and disclosures by providers • Access to health information • Amendment and correction of health information • Accounting for disclosures of health information

19. The Intersection of Privacy and Security Standards Protected Health Information Administrative Procedures Physical Safeguards Technical Security Services Technical Security Mechanisms Authentication Minimum Necessary Business Partner Agreement Patient Authorization Encryption IRB Anonymization Research and Clinical Trials Research and Marketing Marketing and Other Uses of Data Across Open Network Patient Access, Correction, Accounting of Use Treatment, Payment and Operations Over Secure Network Treatment, Payment and Operations Over Open Network

20. Security Requirements

21. Security Standards

22. Security Challenges Authentication of users/partners User privacy Web security ConfidentialityIntegrity Availability No Internet reliability guarantees Failure to plan for growth System vulnerabilities Evolving technologies RISK

23. Administrative Procedures • Certification • Chain of Trust Partner Agreement • Contingency Plan • Formal Mechanism for Processing Records • Information Access Control • Internal Audit • Personnel Security • Security Configuration Management • Security Incident Procedures • Security Management Process • Termination Procedures • Training

24. Physical Safeguards • Assigned Security Responsibility • Media Controls • Physical Access Controls • Policy/Guideline on Workstation Use • Secure Work Station Use • Security Awareness Training

25. Technical Security Services • Access Control • Audit Controls • Authorization Control • Data Authentication • Entity Authentication

26. Technical Security Mechanisms • Required If Using Open Networks • Alarm • Audit trail • Entity authentication • Event reporting • Integrity controls • Message authentication • Plus, At Least One of the Following: • Access controls • Encryption

27. HIPAA Compliance Framework

28. HIPAA Lifecycle Assessmentand Analysis EVALUATE Operation andMaintenance Solution Designand Development SUSTAIN FORMULATE APPLY SolutionImplementation • EVALUATE Critical business and system functions • FORMULATE Plans and solutions • APPLY Solutions to process, data, and systems • SUSTAIN Compliance through time

29. Pro forma HIPAA Project Structure Health Care OrganizationHIPAA Steering Committee Project Office General Counsel Privacy Work Group Security Work Group Technology Work Group Departmental HIPAA Liaisons Department 1 Department 1 Department 1 Department 1 Department 1 Department 1

30. Phase 1: Assessment and Analysis • Tasks • Understand the existing environment • Mission/vision • Organization • Strategic, Organizational and IT plans • Inventory existing systems and operations • Evaluate existing policies and procedures • Perform operational and technical reviews and assessments • Align HIPAA requirements against existing systems • Identify potential compliance gaps Assessmentand Analysis Operation andMaintenance Solution Designand Development SolutionImplementation EVALUATE critical businessand system functions across the enterprise to determine the actions required to achieve HIPAA compliance

31. Phase 2: Solution Design and Development • Tasks • Identify both technical and non-technical solutions • Evaluate effect on business partners • Assess alternative approaches • Integration with Compliance Program • Consider outsourcing • Identify risks and mitigation strategies • Create prioritized project plans • Identify resources required to complete plans Assessmentand Analysis Operation andMaintenance Solution Designand Development SolutionImplementation FORMULATEplans and solutions to respond to HIPAA and business requirements identified in the Assessment and Analysis phase

32. Phase 3: Solution Implementation Assessmentand Analysis Operation andMaintenance Solution Designand Development SolutionImplementation APPLYsolutions developed to those business and system functions necessary to ensure compliance with HIPAA regulations • Tasks • Implement communication strategy • Execute project plans • Perform testing and quality assurance • Provide end user training

33. Phase 4: Operation and Maintenance Assessmentand Analysis Operation andMaintenance Solution Designand Development SolutionImplementation SUSTAINa compliant environment through ongoing initiatives • Tasks • Keep documentation current as changes occur • New systems and technology • Organizational (i.e., mergers and acquisitions) • Periodically test system vulnerabilities • Institutionalize ongoing HIPAA compliance

34. Enterprise-wide planning Align HIPAA initiatives with corporate strategy(s) and integrate into operations Secure management support and awareness Leverage historic and on-going initiatives and accumulated knowledge (Y2K, E-Business, Business Transformation, etc..) Build HIPAA into existing change initiatives (do it once) Integrate with current Compliance Program activities Establish clear governance structure to manage complexities and interdependencies among business units and the technology, security and privacy requirements of HIPAA Ensure on-going communication channels for HIPAA specific initiatives Raise corporate awareness of HIPAA and its potential impacts on the origination and its stakeholders Incorporate HIPAA into existing compliance program Critical Success Factors